The wealth management and IFA industry in the UK

Campbell Cummings

Campbell Cummings

Corporate Finance Partner

With the wealth management and IFA (independent financial adviser) industry growing steadily, and this rise expected to continue, we are seeing an increasing level of mergers and acquisitions within the sector. In this article, we share our insight into the current trends and most prevalent deal structures and valuations in this corner of the market.

The wealth management and IFA industry in the UK is worth c£6.3bn in revenue per annum and continues to grow at over 3% per annum, with industry forecasters predicting compound annual growth to 2027 of nearer 6%. Over recent years changes in regulatory controls, technology, and an ageing demographic of IFA and wealth management business owners has led to consolidation within the sector. This has been driven by a number of larger industry players making bolt-on acquisitions as well as mergers with other large players, in addition to the rise of private equity (PE) investment into platform consolidators within the market.

The sector is seen as attractive to consolidators due to the ageing profile of the population, an overall increase in household disposable income, the fragmented (and regionally-focused) nature of the market and – until recent times – strong growth in the stock market. Other attractions are that the industry is not capital-intensive, has reasonably high barriers to entry due to the regulatory requirements of the industry, and a high level of recurring income from loyal clients.

While historically there have been a number of larger corporates consolidating the sector, there is also now a growing proliferation of PE-backed businesses looking for opportunities in the market. Some examples of those PE-backed businesses pursuing a buy-and-build strategy include Perspective Financial Group, backed by CBPE Capital; Skerritts, backed by Sovereign Capital Partners; Radiant Financial Group, backed by Apiary Capital; and locally in Scotland, the Penta, Souter & Maven-backed Amber River (formerly known as Socium Group), as well as Verso Wealth Management, backed by Cairngorm Capital. The recent announcement of the proposed acquisition of Ascot Lloyd by Nordic Capital, with c£10bn funds under management, only strengthens the feeling that the sector is currently in the sweet spot for PE funds.

Our Corporate Finance team has significant experience in the IFA and wealth management space having assisted on numerous disposals and acquisitions in the industry. The experience of marketing such businesses for sale and attracting multiple offers has provided us with a unique insight into the potential acquirers in the market and the types of deal structures and valuations being offered. Some key trends that we have identified are as follows:


Historically, IFA and wealth management businesses have been acquired for Enterprise Values based on a multiple of revenue – until recent years, on average this was typically around 3x recurring revenue, but the trend more recently has seen deal multiples north of 5x recurring revenue being eminently achievable. However, as this methodology does not reflect the risk associated with the inherent cost base of the business, acquirers are becoming increasingly focused on EBITDA multiples. These EBITDA multiples are now in the high single-digit range depending on the size, scale and opportunity within each business, with double-digit EBITDA multiples being noted recently for targets of significant scale.

Acquisition structure

While Acquirers are still largely focused on share acquisitions, increasingly we are seeing more unique approaches to structure focused on the acquisition of trade and assets / transfer of funds. Acquisition structure is important for a number of reasons, including the tax impact on the Sellers, and post-tax proceeds should therefore be a key focus for Sellers when assessing offers in addition to headline price.


Similarly, structure and timing of proceeds should also be a key consideration for Sellers. Acquirers will typically seek a portion of proceeds to be deferred for a period of time post-completion as a mechanism to protect the value of the business (from both a client and adviser retention perspective). As a rule of thumb, typically we are seeing 50-60% of proceeds being paid up-front on completion, with the remainder being subject to earnout or deferral based on, for example, achieving revenue, profit or funds under management targets in the one-to-three year period post-completion. This obviously has implications for exiting shareholders and expected timeframes for transitioning out of the business.

Defined benefit transfers

Historical exposure to defined benefit transfers is a key consideration for Acquirers, and targets without any exposure will undoubtedly be seen as more attractive and drive premium value.

Client book

Acquirers want to understand the profile of a target’s client book when forming a view on value, with areas of particular interest including average fees / funds under management, location, age range and retention rate.


There is a growing focus from Acquirers regarding the introduction of automated technology solutions for clients (especially those at the lower end of funds under management) as a means to drive synergies from their acquisitions. This growth of so-called “Robo-Advisers” enables Acquirers to benefit from higher margin services from a segment of the market that is typically lower margin for more traditional face-to-face advisers. 

Commissions & platforms

Acquirers will be focused on current commission rates and platforms utilised by the target business primarily to assess potential synergies, but also to identify potential risks to client retention.

Get in touch

The Johnston Carmichael Corporate Finance team has recently advised the shareholders of George Stubbs Financial Services on the sale to Radiant Financial Group, and advised Thorntons Investments on the acquisitions of both Matheson Financial Consulting and Sonas Wealth Management. If you would like to discuss a potential acquisition or disposal in the wealth management sector, please contact me, Andrew Ewing or Gavin Weanie.

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